Monday, 18th February 2019 edition

SingCham Weekly: Govt to allow foreign entry into universities & hospitals


Monday, 11th February 2019

Manufacturing sector to drive Indonesia’s economy: Bappenas

The government believes the manufacturing sector will be the new engine of economic growth for Indonesia and will, therefore, focus on its development in the next five years. A joint report by the Asian Development Bank (ADB) and the Bappenas estimates that Indonesia will see an average growth rate of 6.31% between 2020 and 2024 under the “good scenario”. This scenario projects the share of employment in the manufacturing sector to increase gradually during the period to 20% of the workforce by 2024. The minister said the next medium-term development plan (RPJMN), which was being drafted by Bappenas, would stress on value-added creation in the economy, particularly in the manufacturing sector, so that the country could diversify its export products.

Top Indonesian e-commerce firms

Indonesia’s e-commerce scene is a very exciting one. Last year, its online market transactions were recorded as the highest in SE Asia, with sales volumes reaching US$2.7b. During the national online shopping day (Harbolnas) on Dec. 12, 2018, up to Rp6.8t (US$486.5m) of sales were booked, an increase of Rp2.1t from last year. The top three regional e-commerce firms, Lazada, Shopee and Tokopedia, have successfully expanded their market sevenfold from 2015. Trailing behind Tokopedia in Indonesia are Bukalapak (116m visits), Shopee (67.7m Lazada (58.3m, Djarum and BCA-owned e-commerce firm Blibli (43.1m). The interesting current e-commerce updates are: 1.) Tokopedia remains most visited website, 2.) Shopee wins in mobile apps, 3.) Zalora tops local fashion e-commerce, 4.) Instagram most effective as promotion platform, 5.) Sociolla gains more trust, 6.) iLotte shows amazing growth, and 7.) Elevania is slowing down.

Companies await electric vehicle regulation

Several companies have expressed their readiness to develop and operate electric vehicles although the government has not yet completed a regulation that would provide incentives for their development and adoption. Bakrie & Brothers has announced that it would soon launch an electric bus, produced in cooperation with Chinese automaker Build Your Dreams Auto (BYD). Meanwhile, BMW Group had also expressed its readiness to develop a range of low-emission vehicles. He added that since 2014, BMW had introduced the i8 Coupe and i8 Roadster electric cars in Indonesia.

Pertamina lowers subsidized, non-subsidized fuel prices

State energy holding company Pertamina announced that it would lower the prices of non-subsidized gasoline by up to Rp800 (6 US cents)/l, following a drop in the global crude oil price and the rupiah strengthening against the US dollar. Under the new policy, the price of non-subsidized Pertamax Turbo (RON 98) gasoline in Greater Jakarta has been set at Rp11,200/l, Pertamax (RON 92) at Rp 9,850/l, while Pertalite gasoline (RON 90) remains at Rp7,650/l. The price of non-subsidized diesel fuel has been set at Rp 11,700/l for Dex and Rp10,200/l for Dexlite. The company also lowered subsidized Premium gasoline to Rp6,450/l in Java, Madura and Bali (Jabali) from Rp6,550/l.

Batam eases business licensing to boost investment

The government has launched one-stop investment services in Batam to help process business permits on the island city, which has been designated as one of the country’s special economic zones. The facility will be connected to the online single submission (OSS) system, an integrated web-based government licensing service intended to simplify the process of obtaining business permits for companies in various sectors, excluding finance and mining. The one-stop services are expected to boost investment in the region as difficulties in obtaining licenses often discourage businesspeople, having caused Indonesia to slide to 73rd place on the World Bank’s 2019 Ease of Doing Business Index from its previous position of 72.

Paris to sue Airbnb for S$19m for illegal listing

Airbnb is being sued by the city of Paris for up to €12.5m (S$19.16m), according to the mayor. Paris mayor Anne Hidalgo has accused the home-sharing platform of breaking the law by listing 1,000 homes that have not been officially registered with the City of Paris. “Yes to the sharing economy. Yes to Parisians who rent their apartment a few days a year to have a small additional income. No to those who make money preying, destroying residential housing and risking making Paris a museum city,” said the mayor.


Tuesday, 12th February 2019

Halal certification to raise US$1.6b in revenue

The Indoneisan government expects to raise Rp 22.5t (US$1.6b) in revenue from the halal certification law, which becomes effective this year. “Halal certification for food and beverage products will be implemented over the five years from 2019 to 2024, while [the certification] for drugs will be implemented over the seven years from 2019 to 2026,” said Halal Certification Agency (BPJPH) head Sukoso. The estimated state revenue of Rp 22.5t was calculated according to the number of small and medium enterprises (SMEs) and large companies operating in the country. Statistics Indonesia (BPS) records show 58.97m SMEs operating in the country. Sukoso said the BPJPH aimed to issue 100,000 halal certificates and recruiting up to 5,000 halal certification auditors by 2020.

Digital financial services booming but still lack users

Indonesia is the fastest-growing country in the Asia-Pacific region when it comes to the digitization of financial services, but its penetration remains the lowest in the area. A recent report by global consulting firm McKinsey titled Digital Banking in Indonesia: Building Loyalty and Generating Growth, shows digital banking penetration has increased significantly. In 2017, the number of bank customers who used internet or mobile banking stood at 58% as opposed to 36% in 2014. However, only 5% of the population used digitized financial services in 2017. It was the lowest figure recorded in 15 Asia-Pacific countries observed by the firm. Myanmar, for example, was at 6% and Thailand at 10%.

Futures exchange authority issues regulation on cryptocurrency

The cryptocurrency industry has entered the early phases of recognition from the government after the Trade Ministry’s Futures Exchange Supervisory Board (Bappebti) issued Ministerial Regulation on the implementation of physical markets for crypto assets in futures exchanges. The regulation focuses among other things on good governance principles for crypto asset traders, legal certainty, consumer protection and the requirement for Bappebti to establish a physical market for crypto assets through electronic infrastructure. It also regulates crypto assets that could be traded as well as mechanisms for crypto asset trading, starting from the opening of accounts, fund saving, crypto asset transactions, withdrawing crypto assets and withdrawing funds.

New agency to oversee Singapore’s food safety, security

The Singapore Food Agency (SFA), which is set to be formed on Apr 1 and come under the Ministry of the Environment and Water Resources, will consolidate the regulatory oversight of food safety and security, which are currently divided among three public agencies. These are the Agri-Food and Veterinary Authority (AVA), the National Environment Agency (NEA) and the Health Sciences Authority (HSA). All three work together to oversee the food supply chain — from import, local production, manufacturing to retail. Growing complexity in global food supply chains has also made the safeguarding of Singapore’s food supply even more challenging because it increases the “potential points of failure where contamination can enter the food chain”.

Retail sales down 6% in December

Retails sales in Singapore went down 6% in December as compared to the same month in 2017, according to a release from the Department of Statistics (Singstat). Sales of motor vehicles saw the biggest decline year-on-year at 20.7%, followed by computer and telecommunications equipment at 16.8%. Total retail sales value in December 2018 was about S$4.3b. Online sales made up an estimated 5.5% of this figure.


Global esports revenues to top US$1b in 2019

Global esports revenues will hit US$1.1b in 2019, up 27% since last year amid ballooning revenues from advertising, sponsorship and media rights to competitive video gaming. Brand investments through those three avenues will make up 82% – or US$897m – of total revenues. In all, brand support will have nearly tripled since 2015, according to data from Newzoo, a gaming industry analytics firm. Esports is a form of competitive video gaming with multiple players battling against each other usually in teams, often in matches that are streamed live to throngs of young fans. Esports has burst into the mainstream, with its own superstars and leagues, celebrity athlete owners and tournaments that sell out stadiums and award prizes worth millions of dollars. League of Legends, Dota 2 and Counter-Strike: Global Offensive are some of the most popular esports.


Wednesday, 13th February 2019

Private consortium to build U$6.5b industrial zone in N. Kalimantan

A private consortium led by a Korean company is set to invest approximately US$6.5b to build an industrial zone, a seaport and a coal-fired steam power plant (PLTU) in North Kalimantan. The company, PT Dragon Land would develop a 5,664-hectare area within the Tanah Kuning-Mangkupadi international port and industrial zone allocated for mineral processing companies. Chang Ki-Wook, director for port investment cooperation at the Korean Ministry of Oceans and Fisheries, said the $600,000 grant would allow Korean companies to operate in the industrial zone.

Indonesia to welcome US$900m in automotive industry

Industry Minister Airlangga Hartarto says several investors are committed to investing US$900m in the automotive industry. “Investors from Asia and Europe have expressed their commitment,” Airlangga said. The minister stressed the importance of investment in manufacturing industries, including in the automotive sector, because such industries employed a large number of workers and their products could reduce Indonesia’s dependency on exports. Indonesia exported 346,000 vehicles in 2018, 264,000 of which were completely built up (CBU), while 82,000 others were completely knocked down (CKD). The total value of vehicles exports stood at US$4b, plus $2.6b from component exports.

Hundreds of unlicensed P2P lenders operating in Indonesia

The Financial Services Authority (OJK) has found that 231 illegal peer-to-peer lending (P2P) providers, including those from other countries, have been operating in the country since January. The OJK reported its findings on Wednesday, revealing that the lenders were based on websites, applications uploaded to the Google PlayStore and Instagram. OJK investment alert task force chairman Tongam L. Tobing said seven unlicensed P2P lenders were found on Instagram. “They posted their phone numbers on their Instagram profiles. They didn’t use any websites. We have tried calling them, but they kept changing their numbers,” he said. Some of the unlicensed lenders originated from other countries, including South Korea, Russia and China, the third of which accounted for around 7% of the firms, Tongam said.

GoJek drivers caught faking orders

The Jakarta Police have arrested four suspects for allegedly placing fake orders on ride-hailing app GoJek over the course of two months. Each suspect had registered up to 30 fake accounts, from which they could make Rp10m (US$678)/person/day. The suspects manipulated the GoJek system to make the fake orders. In the GoJek application, it looks like they were serving passengers while in fact they weren’t.

Singapore household incomes grew in 2018, income inequality stable

Households in Singapore saw their earnings from work increase in 2018, while income inequality in Singapore held near the lowest level in a decade. Among households headed by a Singapore citizen or permanent resident which had at least one working person, the median monthly income last year grew by 3% in nominal terms to S$9,293, up from $9,023 in 2017. Meanwhile, in 2018, Singapore’s Gini coefficient – which measures income inequality as a ratio from 0 to 1, with 0 representing total income equality – was 0.458. This continues to be among the lowest levels in a decade, with the Gini coefficient standing at 0.459 in 2017 and 0.458 in 2016.

Visitor arrivals to Singapore rise 6.2% to hit new high in 2018

The Singapore tourism industry had a record year in 2018, with 18.5m visitor arrivals – a 6.2% spike from the year before. Tourists to the island spent a projected S$27.1b, also a new high and an increase of 1% from 2017, said the Singapore Tourism Board (STB). STB highlighted that it took advantage of opportunities in 2018 to promote Singapore as a destination – via events such as the launch of movie Crazy Rich Asians which is set in Singapore, the Trump-Kim Summit and the Bloomberg New Economy Forum.


SMRT focus on reviewing financing model and mounting costs

Now that train reliability has improved, Transport Minister Khaw Boon Wan says he has more breathing space and time to focus on a new issue — how to finance the heavy cost of maintaining Singapore’s public transport system. Mr Khaw noted that the cost of improving rail reliability has taken a toll on the finances of the two rail operators, SMRT Trains and SBS Transit. Under the current financing model, the operating and maintenance (O&M) costs for Singapore’s rail system are fully borne by the two firms. He said that investments by SMRT Trains and SBS Transit, coupled with LTA’s asset renewal, have improved rail reliability significantly. But in the financial year ended March 31 last year, SMRT Trains incurred a loss of S$86m, against an operating cost of S$838m and commuters’ fare income of S$608m, Mr Khaw pointed out.

Trump weighing all options to fund border wall

President Donald Trump is weighing every possible option to find money to build his wall along the southern US border, even as he considers a bipartisan border security deal from Congress. Congress faces a tight deadline to pass legislation to avert another US government shutdown. Several news outlets reported Trump planned to sign the deal. Previously, Trump did not rule out vetoing the legislation and said he was not happy with the deal, which denies him funds for his US-Mexico border wall. But he also said he did not expect another shutdown.

Thursday, 14th February 2019

Govt considers to allow entry of foreign universities, hospitals

Investment Coordination Board (BKPM) head Thomas Lembang said that the government was considering to allow foreign universities and hospitals to operate in the country. Large amounts of money was spent on these services abroad and the government also provides scholarships for students to study abroad, he said, adding that allowing foreign universities to open campuses in Indonesia would reduce the number of students opting who study in other countries. Under the scheme, foreign universities could own up to 67% of the shares for their campuses, he said, adding that universities could control up to 100% of the shares in campuses in special economic zones.

Government increases domestic allocation requirement for coal

The Indonesian government is requiring coal miners to increase their allocation of coal for the domestic market this year to 128m tons, an increase of 5.79% over 2018’s requirement of 121m tons. The ministry explained that 95.73m tons of domestic market obligation (DMO) coal would be used for electricity, 5.4m tons for metallurgy, 1.49m tons for fertilizers, 16.15m, tons for the cement industry, 3m tons for the textile industry, 6.2m tons for the paper industry and 14.500m tons for brackets.

Garuda cuts ticket prices by 20%

Garuda Indonesia announced that it had cut its ticket prices by 20% in response to complaints about the high cost of domestic air travel. In addition to full service Garuda Indonesia, the Garuda Indonesia Group also operates low-cost carrier (LCC) PT Citilink Indonesia, Sriwijaja Air and NAM Air. This is in line with the aspirations of the people and associations of some industries as well as guidance from the President about the need to decrease airplane ticket prices. Previously, President Jokowi called for the lowering of airplane ticket prices after receiving complaints from the Indonesian Hotel and Restaurant Association (PHRI) about low occupancy rates in hotels, which it blamed on high airplane ticket prices. The President also called on state-owned oil and gas holding company Pertamina to lower aviation fuel (avtur) prices, which was believed to be responsible for the high ticket prices.

Singapore attracted S$10.9b worth of investments

Singapore secured S$10.9b worth of inbound investments last year, although business expenditure declined, the Singapore Economic Development Board said. Fixed asset investments (FAI) last year exceeded the target of between S$8b and S$10b. Once the committed projects are fully implemented, these investments are expected to create 17,400 jobs — 22% lower than 2017’s figure — and add S$13.6b per year to the Singapore economy. Total business expenditure met forecasts but fell from S$6.5b in 2017 to S$6.2b last year. The results reflect Singapore’s continued strength as a manufacturing hub, and as the preferred location in Asia for global companies to base key business functions that drive innovation and growth.

Bank of Singapore ties-up with India’s Edelweiss to tap wealth market

Bank of Singapore (BOS) is partnering with diversified Indian financial services firm Edelweiss to allow clients of both entities to tap into their respective product platforms. As part of a memorandum of understanding, BOS will offer its wide range of global investment services to Edelweiss’ clients abroad, while Edelweiss will provide wealth and investment products services to Bank of Singapore’s customers. Edelweiss, an Indian wealth and asset manager, has assets under management of over $25b. BOS, a unit of Singapore’s second-largest listed OCBC, has assets under management of $105b as at Sept. 30, 2018. BOS, which has more than 80 bankers serving non-resident Indian (NRI) clients from Singapore, Dubai and Hong Kong, has seen increased interest from this segment to tap into India’s investment opportunities.

EDB sees driverless cars, mobility as next growth industry for Singapore in 2019

The Economic Development Board (EDB) is setting its sights on Singapore taking a leading role in developing and deploying autonomous vehicles and smart mobility systems, riding the crest of Dyson’s recent announcement that it will build its first electric vehicle manufacturing plant. There have already been investments in the value chain of mobility, in areas from artificial intelligence to urban research. For example, automotive supplier Continental opened its third research and development building in Singapore last year.


Singapore commuters find public transport more reliable

The Public Transport Council released the results of their 2018 Public Transport Customer Satisfaction Survey. It showed that overall satisfaction with public transport had risen. The survey was conducted in October 2018 and polled 5,000 public transport users. While satisfaction with public transport reliability went up from 82.9% to 93.2%, public transport operators are feeling the pinch. Transportation Minister said that “In the financial year ended 31 March 2018, SMRT Trains reported a loss of $86m, against an operating cost of $838m and commuters’ fare income of $608m”.

UOB to launch its digital bank first in Thailand

UOB will launch its digital bank first in Thailand, with the mobile-only bank known as TMRW. The digital bank aims to attract 3-5m customers in the next five years. TMRW is the first mobile-only bank meant to target Asean millennials who transact mainly on their mobile phones. This comes as Asean’s digital generation forms the third-largest base of digitally savvy consumers after China and India. One of TMRW’s most popular features, based on usage data from the 1,500 customers who joined the pilot programme in Thailand, is a money management game that is tied to customers’s savings goals. TMRW’s functions are also meant to strip away banking jargon and to remove hidden fees.

Friday, 15th February 2019

Indonesia to cooperate with five Eurasian countries in trade

The government has announced it will sign a memorandum of cooperation (MoC) on trade with five countries grouped in the Eurasian Economic Union (EEU). Trade Minister Enggartiasto Lukita signed on Thursday a joint ministerial statement with the Integration and Macroeconomics Minister of the EEU, Tatyana Valovaya, to reaffirm their commitment to sign the MoC. Enggartiasto said that with the MoC, the trade value between the two parties could be doubled in the next five years from the 2017 figure, which was recorded at US$2.79b.

Medco to spend up to $24.7m for enhanced oil recovery at Rimau Block

Local energy company PT Medco E&P Rimau, a subsidiary of oil and gas giant PT Medco Energi Internasional, will allocate up to 60% of the US$41.3m from its working commitment scheme (KKP) for enhanced oil recovery at Rimau Block in South Sumatra. Energy and Mineral Resources Ministry data from 2018 show that average oil production at Rimau Block stood at 8,244 barrels of oil per day (bopd) and 3.68m metric standard cubic feet per day (mmscfd). The block’s proven oil reserves stand at 17,675m stock tank barrels (mstb), while proven gas reserves stand at 17.5b standard cubic feet (bscf).


Meeting for Hyflux retail investors planned

Aggrieved retail investors of embattled water treatment firm Hyflux will get to attend an “independent” town hall meeting organised by the Securities Investors Association Singapore (SIAS) within the next two weeks. This closed-door session will not involve representatives from Hyflux and is meant for retail investors to suggest “feedback and ideas”, said SIAS president David Gerald. Such frustrations and worries among minority shareholders have been building up since the second round of town hall meetings organised by Hyflux last month. Investors were told to wait until mid-February for a definitive rescue plan. With that set to be announced in a matter of days, SIAS issued a myriad of queries to the company earlier this week and said it was “seriously concerned” that many questions regarding operations, valuation and accountability have not been addressed.

Ofo suspended by LTA to remove all bicycles from public places

Beleaguered bike-sharing operator Ofo has been suspended by the Land Transport Authority (LTA) for failing to comply with its regulatory requirements. The LTA had suspended Ofo’s operating licence and that the company will be required to remove all of its bicycles from public places by March 13. The authority had earlier given Ofo up till Wednesday to reduce its bicycle fleet to the stipulated maximum fleet size of 10,000 and set up a QR-code parking system. LTA said it “will only lift the suspension if Ofo meets all regulatory requirements”. When asked if LTA would step in to manage Ofo’s assets if the firm does not remove its fleet of bicycles, the authority said that it would do so from March 14, “if necessary”. “The primary responsibility for managing the bicycles lies with the respective operator. To manage taxpayer burden, LTA only steps in where necessary,” said its spokesperson.

Transport Masterplan 2040 for faster, safer, more inclusive transport system

An advisory panel tasked to look into Singapore’s transport master plan for 2040 submitted nine recommendations for an inclusive, well-connected and fast transport system to the Government. The panel led by Senior Minister of State for Transport Dr Janil Puthucheary considered more than 7,400 responses from the public in the last six months. They fall under three key areas namely 20-minute towns and a 45-minute city, transport for all, as well as healthy lives, safer journeys. Under each key area, three recommendations have been made.



Budget 2019 to help companies embrace tech, workers learn new skills

The upcoming Budget will focus on three areas – companies, workers and technology, said Finance Minister Heng Swee Keat. The Budget will focus on helping companies deepen capabilities so they can stay competitive and productive, he said. It will also focus on helping workers learn new skills so that they can enjoy better jobs and pay. The help will be given to enterprises to seize opportunities that are growing in the Asian region. He also said that the Budget will include a major section on social policies. He will announce details on the Merdeka Generation package, as well as some reflections on how bicentennial will be celebrated.